Survey of Okotoks residents reveals acceptance of growth as inevitable

OKOTOKS — Already feeling the strain on their collective waistband, more than three-quarters of Okotoks residents believe further growth of the town is inevitable despite a cap on growth, a new Ipsos Reid survey reveals.

The survey results offer insight to town councillors as they prepare to make a decision in the more than decade-long debate over how to manage development in the bedroom community just south of Calgary.

“Nobody is really denying that growth is going to happen,” Jamie Duncan, vice-president of Ipsos Reid, told the Herald on Monday. “What they’re looking for is clear direction on how it’s going to happen and what role the town is actually going to take in terms of managing that.”

Over the past five years, Okotoks has seen growth of 42.9 per cent, from a population of 17,150 in 2006 to 24,511 last year, according to 2011 census data.

In 1998 the town placed a 30,000 cap on its population. The Sheep River, the community’s water source, can only serve a maximum of 32,000.

On Sept. 24, town council will vote on whether to keep the cap or lift it and instead bid to annex enough land outside the town’s existing boundary to accommodate growth for the next 30 years. Lifting the cap will require the town to explore outside water options, including connecting to a regional water pipeline from Calgary.

The vote, originally planned for June 25, was postponed to allow councillors more time to consider their decision.

In late April the town commissioned the Ipsos survey, in paper and online, the results of which were discussed during Monday’s council meeting.

Of the survey respondents, 74 per cent are concerned about population growth. Of those, 33 per cent are “very concerned” and 41 per cent are “somewhat concerned” about growth.

Eighty-five per cent of survey respondents are concerned about the town’s water supply.

Driving many residents’ trepidation are concerns that Okotoks will lose its “small town feel,” a sentiment shared by resident Mary Ellen Goslin, who said she doesn’t want to see the population cap lifted.

“I like the small town atmosphere,” said Goslin, who has lived in Okotoks for six years. “You get to know people. . . . That’s why I live here, and not in Calgary.”

Of the survey respondents, 86 per cent say it’s important the town maintain its close-knit community atmosphere, including Monika McLachlan, owner of the Okotoks Candy Shoppe.

McLachlan said the small town appeal is what draws customers to her store.

“It’s a destination place, not just a bedroom community for Calgary,” she said.

Rather than have respondents choose future growth options, the survey gauged residents’ feelings about the quality of life, rate of growth, concerns about growth and confidence in town council to make the right decision.

“It certainly wasn’t a plebiscite question,” said Coun. Matt Rockley, who put forth the motion in March for the town to vote on the issue. “It wasn’t intended that this survey will make the decision for us. It was intended that we would receive information to help us determine . . . the best way forward.”

Sixty-six per cent of respondents are confident town councillors will make the best decision for the community.

“To me, that’s a great indication that people feel that council will make the right decision,” said Rockley. “They aren’t looking for a plebiscite to decide this issue.

Coun. Florence Christophers said council now needs to digest the survey results and decide on the best course of action.

Finance Minister Jim Flaherty has outlined new rules aimed at reining in a hot housing market and ensuring Canadians aren't taking on more debt than they can afford.

Flaherty laid out a series of changes to the rules that govern the Canada Mortgage and Housing Corporation, the Crown corporation that effectively oversees the housing market by insuring the vast majority of Canadian mortgages.

The most important new change is that the maximum amortization period has been reduced to 25 years, down from 30. The longer a mortgage is spread out, the lower the monthly mortgage payments are — but the more the borrower ends up paying overall over time.

The impact of the change is likely to be significant. It's about the same as a 0.9 percentage point increase on a typical mortgage, Bank of Montreal economist Robert Kavcic noted.

Indeed, the numbers add up. A $300,000 mortgage spread over 30 years at 4.0 per cent would cost $1,426 a month to pay back. That same mortgage amortized over only 25 years increases the monthly payment by $152 or 10 per cent to $1,578 a month.

Ultimately though, the higher monthly payment saves the borrower money in the long run. The total interest payments are $213,558.91 on the 30-year mortgage, but only $173,416.20 on the 25-year one.

The shortened amortization is also likely to affect a huge segment of the market, as about 40 per cent of all new mortgages were amortized over 30 years last year, the Canadian Association of Accredited Mortgage Professionals estimates.

Anyone who needed or wanted a 30-year mortgage before is going to have to qualify under tougher 25-year requirements now.

Ottawa has now moved three times to rein in the maximum mortgage term, since the CMHC briefly started insuring mortgages with 40-year terms in 2006. The limit was brought down to 35 years, then 30 and now the more traditional 25.

"The reductions to the maximum amortization period since 2008 would save a typical Canadian family with a $350,000 mortgage about $150,000 in borrowing costs over the life of that mortgage," Flaherty said.

At 25 years, the maximum amortization period for CMHC-backed loans is now back to where it had historically been before the Harper government began raising the period after taking office in 2006.

Interim Liberal Leader Bob Rae made that very point in question period on Thursday, asking Prime Minister Stephen Harper if raising CMHC's limit to 40 years in the first place was a mistake.

"The government has altered rules a number of times and will continue to do so on a prudent and flexible manner depending on the circumstances," the prime minister replied.

Flaherty also outlined a few other measures Thursday.

The government has lowered the total amount that Canadians can withdraw when refinancing their homes to 80 per cent of the home's value, from 85 per cent.

"This will promote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes," Flaherty said.

Flaherty also moved to cap the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent in order to get CMHC insurance. Banks calculate the former by adding up mortgage payments and property taxes on a home loan, and dividing by the borrower's income. The latter adds in other debt payments such as lines of credit and credit cards to the top side of the ledger.

Although they both have obscure, technical names, they're both effectively just limits on how much debt a borrower is allowed to take on as a percentage of their overall income. That move, too, is aimed at making sure borrowers can't bite off more than they can chew.

The final change was to limit CMHC insurance to homes priced under $1 million. "Wealthy people can borrow whatever they want from banks, and they can work that out from banks," Flaherty said. "That is not my concern."

That effectively means that a homebuyer who wants to purchase a home for more than $1 million can't get insurance on it — which in turn means the buyer will have to come up with the 20 per cent down payment requirement in order to get an uninsured mortgage.

So under any circumstance, any new borrower wanting to buy a home of $1 million or more is going to have to put $200,000 down at a minimum. That's also likely to have a major impact on a comparatively small segment of the market.

"Although this could create some market dislocations in the just-under-$1-million segment, it's consistent with CMHC's recent efforts to focus its insurance business on encouraging owner-occupied purchases among average Canadians," BMO economist Michael Gregory noted.

All of the changes will be in effect as of July 9, 2012. In the interim, the action in hot Canadian housing markets is likely to get even hotter, experts say, as borrowers scramble to get in ahead of the more stringent rules.

But there's likely to be a subsequent pullback, too, he says. The last time Ottawa tinkered with CMHC rules, home sales fell by three per cent in the two months following the implementation date.

The Canadian Real Estate Association reacted coolly to the news on Thursday, calling it a "measured response" to rein in debt loads, but taking pains to note that the home resale market contributes $20 billion a year to Canada's economy and as such, is deserving of caution.

"Going forward, we would urge the government to consider the impact of further interventions in the market carefully," CREA said.

Calgary, June 1, 2012May 2012 residential sales in the City of Calgary increased by 31.8 per cent over last year, to 2,385, making it the highest May activity since the recession.

In the past month, easing concerns regarding Calgarys long- term economic prospects combined with continued full-time job growth and low interest rates, has contributed to the rise in housing demand, pushing sales to levels more consistent with long term trends, says Ann-Marie Lurie, CREB®s chief economist. However, we are not out of the woods in terms or economic risks, as recent indicators point towards weak growth in the U.S. economy and increased uncertainty in global markets.

Demand growth continues to outpace supply in the single-family market. Monthly sales reached 1,710 units in May, resulting in year-to-date sales 19.1 per cent higher than the same period last year. While new listings recorded a year-over-year increase of 6.7 per cent, this did little to alleviate the supply constraint in the single-family market. Inventories totaled 3,842 in May, keeping months of supply in seller territory, with less than 2.5 months of supply.

With less supply in the single-family market, buyers are making their decisions quicker, says Becky Walters, CREB®s president-elect. As a result, weve seen a reduction in the amount of time homes stay on the market, and sellers are getting figures closer to their list price.

The single-family benchmark price for the month of May 2012 was $427,500, a 6.7-per-cent increase over the previous year. Prices were expected to record modest gains this year and, while the increase is higher than expected, the single-family benchmark price remains 5.3-per-cent below the peak price of $451,400, reached in July 2007.

Buyers are also turning to surrounding areas and the condominium markets, both of which have adequate supply levels and price growth that remain below single-family levels, Walters says.

After the first five months of the year, condominium-apartment sales totaled 1,518, an 8.7-per-cent increase over the same period last year. New listings for the month rose by 5.4 per cent compared to last year, but on a year-to-date basis, they remain at comparable levels. As the number of sales outpaced new listings, total inventory levels of apartment condominiums have retracted by 3 per cent over May 2011, and with three months of supply, firmly moved into balanced territory.

The condominium-apartment market recorded a modest improvement in pricing, with a benchmark price of $245,400 in May 2012, a year-over-year price gain of one per cent. Meanwhile, condominium-townhome benchmark prices appreciated by 3 per cent over last year for a monthly price of $277,000.

While there have been some conflicting opinions on the national housing market, particularly with price expectations, the Calgary housing market does not appear to reflect either a boom or a bust scenario, and is simply returning to activity levels consistent with a normal market, says Lurie. The current low supply in the single-family market has pushed up pricing slightly higher than anticipated. However, sufficient supply in the remaining housing industry combined with economic uncertainty will likely prevent a repeat of the price jumps recorded in the not-so-distant past.

About CREB®

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